Idea in Brief
The New Landscape
There is no longer a clear line between nonprofit and for-profit enterprises. Nonprofits now offer products that compete with those of the best for-profits, and for-profit ventures, often backed by impact investors, can deliver as much social value as traditional charities.
The Dilemma
Many founders of social enterprises are so hungry for capital that they base decisions about which legal structure to adopt on whether the first major check comes from an investor or a grant-making organization.
The Better Way
To guide their choice, founders can ask: Is the market ready for a for-profit solution? Are customers willing to pay? Where is the available capital? What will attract the talent we require? Once they pick a legal structure, they should stick with it; ventures that try to change midcourse often flounder.